Sun, Sep 24, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

A. Ineichen: the real value of hedge funds is in active risk management, not alpha

Thursday, December 02, 2010

Benedicte Gravrand, Opalesque Europe:

"Is alpha quantifiable in the absolute return space?" asked Alexander Ineichen his audience during Terrapinn's Hedge 2010 conference in London last month. The short answer was "not really."

Alpha is not really more than just a marketing term, he said. The value that hedge funds really add, according to the Zug, Switzerland-based founder of Ineichen Research and Management, is active risk management.

Hedge funds indeed seek an asymmetric return profile through active risk management rather than try and beat an arbitrary benchmark. It is risk management experience and skill that help survive accidents and avoid negative compounding. And accidents do happen; financial crises have occurred every 10 to 15 years since the Middle-Ages. Risk management is the discipline that deals with these "known unknowns".

The twenty-year period from 1980 to 1999, according to Ineichen, as far as financial cycles go, was an outlier, as indeed the equity market compounding rate was unusually high then; UK equities, for example, returned an average of 12 to 14%.

"This was essentially an accident," he explained, "as much lower returns are the norm. During this investor-friendly period, it was not necessarily obvious that risk management was required for the long-term investor; long-only and buy-and-hold strategies......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. iCapital Network enters deal to acquire innovative U.S. private equity access fund platform from Deutsche Bank[more]

    Komfie Manalo, Opalesque Asia: Financial technology platform iCapital Network has entered into a definitive purchase agreement to acquire the US Private Equi

  2. Launches - Orchard launches new credit platform, ETN based on hedge fund to launch on the LSE[more]

    Orchard launches new credit platform Orchard Platform has rolled out Deals as a part of its new platform launch. With the addition of Deals to their suite of technology solutions for loan originators and institutional investors, Orchard Platform takes the next step in their evolution. De

  3. Neuberger Berman closes $1.1bn Credit Opportunities Fund[more]

    Neuberger Berman, a private, independent, employee-owned investment manager, announced that NB Private Equity Credit Opportunities Fund LP closed on $1.1 billion of limited partner commitments. The Fund seeks to invest in the secured and unsecured debt of private equity-backed companies, primarily i

  4. Capital Dynamics launches mid-market private credit business[more]

    Capital Dynamics, a global private asset manager, has launched a dedicated Private Credit Asset Management business. Experienced industry executives Jens Ernberg and Thomas Hall have joined Capital Dynamics to co-lead the company's new private credit initiative. They are based in Capital Dynamics' N

  5. ...And Finally - FAN-antic[more]

    From Newsoftheweird.com: Jeffrey Riegel, 56, of Port Republic, New Jersey, left 'em laughing with his obituary's parting shot at the Philadelphia Eagles. In it, Riegel asked that eight Eagles players act as pallbearers, "so the Eagles can let me down one last time." Riegel owned season tickets for 3